AQA BUSS4 REVISION POSTERS

An analysis of Apple Inc:

An analysis of BAE Systems:

An analysis of Nissan Sunderland:

 

 

An analysis of Dyson:

 

 

 

An analysis of GlaxoSmithKline:

 

An analysis of JCB:

An analysis of Jaguar Land Rover:

An analysis of Rolls-Royce:

An analysis of Samsung:

An analysis of Warburtons:

Important theorists and ideas for analysis:

This years (2015) research topic is manufacturing in the UK. Here is a look at the factors surrounding location (Research bullet point 4):

Here is a look at the opportunities and threats for UK manufacturers (Research bullet point 5):

Recommended Revision Websites/Videos

1.

The first website I recommend is linked below and can be used for both AS and A2 Business Studies.

I love how all the chapters and units are organised into folders and in each chapter it provides:
- The specification of what you need to know
- Theory (in the form of a PDF which you can print)
- It has activities/worksheets with questions, so you can practice what you had learnt from the theory.
- It has additional reading on the topic which can help improve your understanding and knowledge of the theory.
- Finally, it has revision notes which you can add to your own class notes and print off.

Check this website out, it is a difficult one to find on the internet and is a real gem! :)

http://www.holyfamily.ngfl.ac.uk/minisites/a-levelbusiness/

2.

This is an excellent website which can be used for GCSE and A-level.

http://www.businessstudiesonline.co.uk/live/

3.

The Student Room is a forum for all students, which is open for you to read and you can join it if you want to participate and ask questions. I used this website a lot during my exams, and even after my exams to see what people thought of the test. If you also want to discuss careers in business or doing a degree in it, this site is great.

http://www.thestudentroom.co.uk/forumdisplay.php?f=111

4.

Want some model answers to questions? This is the place!! Print them off and learn how to get full marks in your AS Business Exam.

http://www.hodderplus.co.uk/ocrbusiness/

5.

If you want to revise critical path analysis or you need it to be explained to you again, you are sure to understand it after watching this video! I also recommend you check out more of this youtuber's videos as they are really helpful and good.

https://www.youtube.com/watch?v=-EqWGSdQSvI&list=PLBuW3SAj0djnHfFQG4m9VbN03mA_MMLlv

Chapter 24: Quality

Quality is those features of a product or service that allows it to satisfy (or delight) customers.

 

Benefits of having a quality system:

A Quality System is the approach used by an organisation to achieve quality. Most quality systems can be classified as either quality control or quality assurance.

1. Impact on sales volume

• If the product/service meets customer needs --> Demand would increase --> Enable the business to increase the level of its profits.
• People become richer --> Desire for high quality goods increase rapidly --> Because of less constrained by level of income.

2. Creating a USP

• Not achievable for all businesses, especially those trying to keep costs low
• Can use quality as a USP --> To increase demand.
• E.g. Often there is an 8-week waiting list for weekend bookings for afternoon tea at the Ritz Hotel in London. Potential customers see service as unique, a mix of:
• Tangible quality --> High quality of products and services provided.
• Intangible quality --> Image linked to the name of the hotel.
• The uniqueness of the service increases customers' desire to enjoy it, ensuring regular and high demand.

3. Impact on Selling Price

• Quality as a USP encourages consumers to pay a higher price for products/services.
• E.g. Food prices in M&S is higher than other supermarkets.
• Customers are willing to pay a higher price for better quality.
• Increases profit margins
• Note: Better quality materials and production needed to achieve high quality products.
• Quality as a USP is common in niche markets e.g. Harrods or Hotel Chocolat
• Greater perception of quality --> The higher the selling price the firm can charge
• E.g. Afternoon tea at the Ritz costs £36 pp.

4. Pricing Flexibility

• Reputation for quality gives business ability to be more flexible in its pricing.
• E.g. British airways charges higher prices to customers who value quality of service on flights. They also have flexibility to offer discounted prices in order to fill planes where necessary - the high price paid by customers would have already guaranteed the firm a profit.

5. Cost reductions

• It is costly to implement a quality system but can reduce business costs.
• No wastage of faulty goods or possible recall of many products already sold --> Expensive Process
• Costs of reworking products in a faulty manner or waste of materials.

6. The firm's reputation

• No quality system = Costly to business reputation.
• E.g. 2006 - Cadbury's reputation was damaged by negative publicity --> Salmonella scare and faulty labelling of products.
• Customers remember unfavourable publicity
• Good quality system --> Prevent problems --> Help business avoid any damage to reputation 

Issues involved in introducing and managing a quality system:

1. Costs

• Administrative expense to set up
• Continual monitoring of production, materials and processes
• For an overall assessment of the value of a quality system --> Costs compared with financial benefits arising from high quality achieved EXCEED costs incurred to achieve it.

2. Training

• Quality assurance relies on a well-trained workforce who can understand and implement the quality system.
• Training is quite expensive
• Create cultural changes e.g. more consultative style of management and greater willingness to give responsibility to workers.

3. Disruption to production

• Short-run -Training programme disruptive to existing production methods.
• Training --> Staff will be taken off the current production line to undergo training.
• This would short term damage quality and quantity of production.
• After training complete --> Further disruption --> Workforce, managers and suppliers must adapt to new systems of quality.
• During this period, mistakes are more likely to happen + danger of company's reputation for quality may suffer.
• Yet once new system established --> Problems should disappear.

Quality Control

Quality Control: A system that uses inspection as a way of finding any faults in the good or service being provided.

- This is where there is inspection at the end (with the end product)

- Firms have now moved on from quality control onto quality assurance.



Quality Assurance

Quality assurance is a system that aims to achieve or improve quality by organising every process to get the product 'right first time' and prevent mistakes ever happening.

 This involves self-checking, concentrating on the process of production.

Benefits of Quality Assurance:

• Ownership of the product rests with the workers, giving them greater responsibility.
• Herzberg argues that there are positive effects on motivation because of this sense of ownership and recognition of the worker's responsibility.
• Costs are reduced because there is less waste and less need for reworking of faulty products.
• With all staff responsible for quality, there should be a higher and more consistent level of quality, which can lead to marketing advantages for the firm.

The problems are the same: Cost, training and disruption to production.

Total Quality Management (TQM)

It is the most widely recognised quality assurance system.

Total Quality Management is a culture of quality that involves all employees of a firm.

It is based on the philosophy of 'right first time'.

Kaizen

Kaizen is a policy of implementing SMALL, incremental CHANGES in order to achieve better quality and/or greater efficiency.

Focussed on making 'continual improvement'.

Quality Standards

Quality Standard: A set of criteria for quality established by an organisation. The standard also requires an organisation to have systems for implementing and monitoring its standards.

BS 5750: A British standards award granted to organisations that possess quality assurance systems that meet the standards set.

ISO 9001: The international standard of quality assurance that is equivalent to BS 5750.

The benefits of these awards are:
- Marketing advantages from the acknowledgement of higher quality standards
- Assurance to customers that products meet certain standards
- Greater employee motivation from the sense of responsibility and recognition
- Financial benefits in the long term (due to elimination of waste and improved reputation of firm).

Quality Summary:

Chapter 23: Making operational decisions

Operations Management

Operations management is the process that uses the resources of an organisation to provide the right goods or services for the customer.

Issues that are all aspects of operational management:
Location, the mix of resources in production (labour, land, enterprise and capital), managing capacity utilisation, stock control, quality, customer service, working with suppliers to improve efficiency and using technology.

Operational Targets

Operational targets are the goals or aims of the operations function of the business.

These may be set in terms of:
1. Improvement in unit costs
Measured by reduction in costs, potentially leading to increased profits

2. Improvement in quality
Measured by a reduction in wastage, decrease in level of complaints etc.

3. Increased capacity utilisation
Measured by an increase in actual output as a percentage of maximum possible output.


Unit Costs

The unit cost is the cost of producing 1 unit of output. It is calculated by the formula:

Unit Cost =    Total Cost    
                   Units of Output

Example: What is the average or unit cost of a firm that produces 6,000 units of output at a total cost of £27,600?
Answer: £4.60 (27,600 / 6,000)

- The unit cost is also known as the average cost (AC) or average total cost (ATC).
- Normally, the higher the units of output, the lower the unit cost.
- To measure efficiency, the company could compare its unit costs with those of its competitors. The business with the lowest unit costs will be the most efficient, in this type of measure.
- The higher the labour productivity, the lower the wage costs per unit

Measures of Quality
Quality is defined as 'those features of a product or service that allow it to satisfy (or delight) customers'.

Examples of different measures of quality:

• Customer satisfaction ratings - (e.g. 1 to 10 or 'excellent' 'good' or 'poor')
• Customer complaints - This calculates the number of customers who complain (it is sometimes measured as a percentage of the total number of customers).
• Scrap rate - This calculates the number of items rejected during the production process as a percentage of the number of units produced.
• Punctuality - This calculates the degree to which a business delivers its products (or provides its services) ON TIME.

Punctuality (%) =  Deliveries on time
                                Total Deliveries      x 100

Capacity Utilisation

Capacity: The maximum total level of output or production that a business can produce in a given time period. A company producing at this level is said to be producing at full capacity.

Capacity Utilisation: The percentage of a firm's total possible production level that is being reached. If a company is large enough to produce 100 units a week, but is actually producing 92 units, its capacity utilisation is 92%.

Spare capacity (or under-utilisation) is when a firm's output is below the maximum possible. Thus, a company on 90% capacity utilisation has a spare capacity of 10%.
 
Many people believe that 90% capacity utilisation is a sensible level. At 100% there is no scope for maintenance and repair, to respond to sudden orders or to deal with emergency situations that my occur.
 
Every percentage point below 100 represents 'unused' resources and higher fixed costs per unit produced.

Links between capacity utilisation and other operational targets

Capacity utilisation and unit costs

- The higher the level of capacity utilisation, the more efficient.
- This is because fixed costs are spread over a larger output.
- Therefore unit costs are lowered
- The company is more profitable or more able to lower prices to attract demand.

Capacity Utilisation and Quality

- At high levels of capacity utilisation there is a possibility that quality will DECREASE (an even greater problem if quality is the firm's USP!)
- There is no scope for maintenance work or ensuring staff are not overworked.
- At low levels of capacity utilisation, quality may also decrease due to demoralised workers (bored)

Spare Capacity

Under-utilisation of capacity: When a firm's output is below the maximum possible. Also known as spare capacity or excess capacity. It represents a waste of resources and means that the organisation is spending unnecessarily on its fixed assets.

Disadvantages of Spare Capacity

• Higher proportion of fixed costs per unit - Utilisation falls, fixed costs must be spread over fewer units of output --> Leads to higher unit costs.
• Higher unit costs lead to lower profit levels or need to increase price to maintain the same profit levels --> To lower sales volume.
• Spare capacity can portray a negative image of a firm - Suggests it is unsuccessful, e.g. club with low utilisation can be physically seen --> Put customers off --> Lower sales
• Employees bored and demoralised - Due to less work to do --> Lowering motivation and efficiency. Problem is permanent --> Workers are worried about loosing their jobs.

Advantages of Spare Capacity

• More time for maintenance and repair of machinery, for training and improving existing systems. Can use time to improve set up and improve skills. better prepared for an increase in trade.
• Less pressure and stress for employees --> Who may become overworked at full capacity.
• Can cope with sudden increase in demand --> Businesses in expanding markets will increase their capacity beforehand, so their sales are not limited by size of factory/shop. 

Calculations

A firm may use calculations of spare capacity to see the maximum possible sales that it could achieve before it needs to extend its capacity.

Maximum Capacity          =       Maximum Sales Revenue
Current Capacity Level                Current Sales Revenue

e.g.     100%     =     £x    
            80%             £12m    

so x =   ((100 x £12m) / 80)   = £15 million

Demand

If the business has spare capacity, it may improve its marketing mix in order to increase demand.
e.g. McDonalds increased their product range (McCafe)

But some may have the problem of a capacity shortage.
e.g. High demand for concert tickets.
Solution: Increase selling price --> Reduces demand to a reasonable level and maximises sales revenue.

Supply

If the business has spare capacity, it may follow a policy of rationalisation in order to reduce its capacity and save unnecessary expenditure.

Rationalisation: A process by which a firm improves its efficiency by cutting the scale of its operations.

e.g. reducing its maximum level of output from 200 units to 100 units.
Woolworths reduced the size of many of its stores.

Subcontracting

Subcontracting is when an organisation asks another business to make all or a part of its product.

Subcontracting can be used to reduce capacity utilisation problems. Subcontractors can be asked to supply products to match demand without increasing its own factory.

Similarly it can reduce supply to match a fall in demand by reducing the work it subcontracts without making changes to its own factory size.

Advantages:

• Flexibility to react to changes
• Subcontractors are more specialised and efficient
• Allows the firm to focus on its core business and avoid being involved in areas where it is less competent.
• The subcontractor can deal with non-standard orders, benefitting the business, but without disrupting normal business.

Disadvantages:

• Quality is no longer under their own control - this may affect the reputation of the company.
• Excessive subcontracting erodes a company's operations base and its ability to initiate and make changes.
• Opportunity cost of subcontracting - would it be cheaper/more profitable to produce in-house? As the producer wants to also make a profit....
• Subcontracting may require a firm to give confidential information away. e.g. to a supplier such as details of methods of patents.

Stock Control

Stock control: The management of levels of raw materials, work in progress and finished goods in order to reduce storage costs while still meeting the demands of the customer.

The ideal stock level
- Low stock levels are ideal if - Rent is high in the area, if it is a perishable good and if it suffers cash-flow problems
- High stock levels are ideal if - The business gains large cost savings by bulk buying a product or the product has unpredictable peaks in demand.


Dealing with Non-standard orders

Non-standard orders - a business decision related to a one-off contract. Usually, the non-standard order requires a response to a request to supply a fixed quantity of a product at a particular price (invariably a lower price than usual).

The key operational factors of non-standard orders:

1. Capacity and its effect on production
- If there is plenty of spare capacity --> The non-standard order may improve efficiency as the firm will be producing closer to full capacity.
If the firm is close to full capacity (or the non-standard order is large and will take the firm beyond its capacity), it may prevent other, more profitable orders from being accepted.

2. The flexibility of capacity in the organisation
If a business subcontracts a large amount of its production, it can adapt readily to non-standard orders.
But if the business relies on its own production, then non-standard orders will present more problems.

3. Impact on costs
Terms of an order may require additional spending on fixed costs in order to meet the specific requirement of the new customer.
Unless the business has plenty of under-used resources, likely to increase variable cost per unit e.g. from paying overtime to staff or purchasing new components.

4. Is there potential for future (profitable) orders?
Although the non-standard order may make a loss, it can build up a relationship with a newer customer.
A satisfied customer may return in the future with many large, profitable orders.

5. Effect on staff
If the workers are under pressure, a non-standard order may add stress and pressures on the workforce.
If the workforce is feeling insecure due to lack of orders, a non-standard order can prevent redundancies, boost morale and productivity.
The nature of the non-standard order may increase variety and interest among the workforce (or add to boredom and monotony).

Chapter 22: Developing and retaining an effective workforce: Motivating Employees

Motivation: The causes of people's actions - why people behave as they do.

Motivation Theory: The study of factors that influence the behaviour of people in the workplace.

Scientific Management: Business decision making based on data that are researched and tested quantitatively in order to improve the efficiency of an organisation.

Links between Maslow and Hertzberg

Intrinsic Rewards
Rewards that come from the job itself
e.g. responsibility, achievement of tasks etc...
Hertzberg's motivators and Maslow's esteem and self-actualisation

Extrinsic Rewards
Rewards that DO NOT come from the job itself but by means of association.
e.g. Working conditions, fringe benefits, making friends etc...
Hertzberg's hygiene factors and Maslow's physiological, safety and social needs.

Random question:
Q: What is Appraisal?
A: Appraisal is the meeting of an employer and an employee to discuss targets, issues, achievements and work.

Financial and Non-financial Motivators

Financial Methods

1. Time Rates
- Wage or a salary
- Safety need in Maslow's Hierarchy of needs.
- Paid according to input rather than output
- Motivation to work not guaranteed

2. Piece-work (Payment based on the number of items each worker produces)
- Refers to Taylor's theory
- Payment according to output
- Designed as an incentive to work harder
- Could sacrifice quality for quantity
- Costs could increase through carelessness, waste and reduced quality
- A firms output may be heavily influenced by worker's needs rather than customer demand. Output tends to increase at Christmas and summer holidays.
- Only movement not motivation (as shown by Herzberg)

3. Performance-related Pay (A bonus or increase in salary usually awarded for above-average employee performance)
- An overall increase in salary or a bonus given for performance above expectations.

4. Profit Sharing (A financial incentive in which a proportion of a firm's profit is divided among its employees in the form of a bonus paid in addition to an employee's salary)
- Basing employee's rewards on the performance of the company.

5. Share Ownership
Companies give shares to their employees or sell them at favourable rates below the market price.
- Used to encourage employees to identify more directly with company objectives, recognising that their rewards - share value and dividends - are dependant on company performance.

6. Share Options
A financial incentive in which chief executives and senior managers are given the choice of buying a fixed number of shares at a fixed price, by a given date.
- Are believed to provide senior management with the incentive to perform at their very best.
- Some people believe they it would only be short-term until the share option is due, in order to make a profit from the sale of shares. It is not long-term focussed.
- Unfair as excessive financial rewards given to senior managers when the workforce may deserve just as much credit as the directors.

7. Fringe Benefits
Benefits received by employees in addition to their wages or salary.
e.g. discounts when buying the firm's products, a company car or a company pension scheme.
- Encourages staff loyalty and commitment
- Reduces labour turnover


Non-financial methods of Motivation

1. Job enrichment
A means of giving employees greater RESPONSIBILITY and offering them CHALLENGES that allow them to utilise their skills fully.

- Herzberg suggested only job enrichment is likely to provide long-term job satisfaction.
- Enriched jobs introduce new and more difficult tasks and challenges at different ability levels.
- An enriched job involves a complete task which is meaningful rather than a repetitive part of a larger process - said by Taylor.
- Regular feedback on performance so employee is aware of how well they are performing.
- Increase accountability of individual for his/her own work (e.g. Lush)

2. Job enlargement
Increasing the SCOPE of a job, either by job enrichment or by job rotation.
- Gives: more recognition, improves promotional prospects and job achievement in themselves.
- If not used carefully --> Demoralise workforce by giving excessive workloads.

Job enrichment is where the job is expanded vertically (vertical extension) by giving workers more responsibility.

Job rotation is where the job is expanded horizontally (horizontal extension) - giving workers more tasks but the same level of responsibility.

Job Rotation
- Systematic programme of witching jobs
- Greater variety
- Varied work but same level of challenge.

Advantages of Job Rotation:

• Relieve boredom
• Useful if 1 person is absent --> Others can cover job without difficulty
• More motivated --> Wider range of skills + be more flexible
• Greater sense of participation in production process.

Disadvantages of Job Rotation:

• Retraining cost Increase
• Decrease in output due to less specialisation
• Could be seen as involving greater number of boring tasks, but lacking in social benefits of working as groups constantly change.

3. Empowering Employees
Empowerment is = giving employees the means by which they can exercise power over their working lives.
- The freedom to decide what to do and how to do it.
- Achieved through informal systems or formals systems of autonomous work groups
         --> These provide workers with autonomy and decision-making powers, and aim to increase motivation while improving flexibility and quality- adding value to the organisation.

Empowerment involves:

• Recognising workers who are capable of doing more
• Make workers feel trusted, confident in their jobs and make decisions without supervision
• Recognise workers' achievements
• Create an environment where workers wish to contribute and be involved.

3. Teamworking
Teamworking is = A system where production is organised into LARGE UNITS OF WORK and a GROUP of employees work together in order to meet shared objectives.
- By using Teamworking, an organisation gets a more motivated, flexible workforce that can cover absences more easily.
- Used with job rotation/job enrichment and decision-making --> Team work can enhance motivation and relieve boredom. 
- Teamworking can be linked to Mayo (group norms) and Maslow (Social Needs)


Links between organisational structure and the motivational techniques available to managers

1. Flat organisation

- With wide span of control
- Effective delegation could empower employees by giving them more autonomy an responsibility --> Improving Motivation

- Recognition (Mayo and love and belonging needs)
- Profit Sharing?

2. Tall organisation
- Good communication is crucial in maintaining high levels of motivation
Solution: Vertical meetings, teamwork/cross jobs

Lines of Accountability
Must be clear --> Easier to recognise achievement --> To reward this -->Improved Motivation.

Communication
- Employees feel valued and important part of the organisation
- Raises morale
- Regular feedback on employee performance is needed
- Good communication is likely to mean that employees are praised for their efforts --> Maslow (Esteem needs) --> Improve motivation.
- Also good communication can help to make employees feel involved and meet their social needs (Maslow)
- Effective feedback is one of Herzberg's motivators.

Flexible working
- Allowing employees to work more flexibly
- Improved Staff motivation
- Increased productivity
- Improved client service
- Reduced absenteeism